Credit Card APR Rates

Credit card APR is what actually burns a hole in your pocket. APR or annual percentage rate is the annualized cost of credit. It is the amount you pay over the credit you have taken through your credit card. It also includes some bank fees or prepaid interest. APR gets added to the total debt, in turn keeps attracting more interest and the debt keeps rising. This process is known as compounding. So the burnt hole gets bigger with the passage of time.

Average APR rates vary from one company to another. It can be anywhere between 10 to 20%. Thus, before you decide upon applying for a particular credit card, shop around a bit and find out which card suits your requirements the best. A number of online credit card application sites offer a tool such as credit card calculator wherein you can compare APR rates on different credit cards just by filling in a few details. This interactive tool is capable of scanning through 300 UK credit cards. Thus, you can easily locate the cheapest and the best deal for you.

The Credit Card Market in UK has become highly competitive. Thus, to attract customers some of the companies offer low introductory APR rates, which could be as low as 0 to 2%. This interest free period can last from 6 months to one year. Lower will be the APR lesser will the credit card cost you. If you pay off the whole amount you owe, usually there is no interest charge. So, provided you pay off the full balance every month, credit cards give you interest free credit for on average about one month. According to experts at Moneyfacts, Average annual percentage rate (APR) for a credit card for purchases is 16.1%. With a balance of £3,000 on a card offering a rate of 16.1%, and paying off the minimum balance each month, over £400 a year could be saved by switching to a different card.

Some times, the credit card companies offer lower APR rates to certain privileged customers such as those having a very good credit rating. If you have a bad credit history and thus a bad credit rating then the amount of interest you have to pay as APR can go quite high. Credit card companies offer low APR rates along with various other schemes to their Gold and Platinum card holders. However, not everybody qualifies to be a Gold or Platinum card holder.

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